The city of Toronto’s government management committee declined to take definitive action on a cafeteria-style restaurant at city hall that owes almost $200,000, sending the matter back to staff.

Cafe on the Square also has yet to carry out about $140,000 in renovations it agreed to in a new lease, signed two years ago.

Staff had sought authority to demand payment from the Ontario numbered company 1158093, or face eviction, but councillors decided to refer the matter to the chief corporate officer so she can report next year on any actions taken.

“If there is something we can work out that’s reasonable to bring back to committee, they’ll do so. If not, they’ll take whatever action is necessary,” said David Shiner, the committee chairman. “The taxpayers are owed almost $200,000 and we have to remedy this.”

In 2012, city council awarded a 10-year lease to run the restaurant and catering services at city hall to Cafe on the Square, which has had a lease since 1999.

Under the new arrangement, the cost of “common area and maintenance” increased dramatically from $2.50 a square foot, which was a subsidized rate, to almost $18, although the café is not charged for outside space. This was clearly outlined in the agreement, but operator Tony Palermo told the committee it was too high to be affordable.

“My books are open for your review, every day that we operate we lose money,” said Mr. Palermo, who said he is associated with the Harbour 60 restaurant.

“We could buy cheaper food. We’ve never done that. We’re not going to do that. In the history of food services in public buildings in Canada, all you have to look and see how disastrous it is. We may be the only place left standing.”

City staff say they have repeatedly tried to get the tenant to pay what it owes, or to change the hours of operation to bring in more revenue.

Councillor Doug Ford, a committee member, asked if the tenant could bring in a chain coffee shop to provide some of the fare, but Joe Casali, director of real estate services, said that is not allowed under the terms of the lease. A change to the menu would also require sign-off from city staff.

Councillor Peter Leon asked about making some modifications, such as reducing the size of the restaurant, but Mr. Casali cautioned against too many negotiations.

“There are other people who bid on the [request for proposal] who didn’t have the opportunity to negotiate with us. In terms of how the city undertakes its business, we should be treating everybody in the same manner,” he said.

Councillor Ford told Mr. Palermo, “Does your business model suck a little bit? Absolutely.” However, he also urged staff to see what the market will bear.